Last week, HDH announced rental rate increases for our graduate housing. Over the last few days, we have received feedback from students, residents and faculty, and have had additional conversations with various stakeholders. We understand how challenging this situation is for all involved, as we continue to work toward sustainable options. We would like to clarify facts, provide historical context and announce a new exemption.
Creating the opportunity for graduate students to live on campus was a priority that emerged from the Campus Strategic Plan. Prior to Mesa Nueva’s opening in 2017, there were approximately 2,900 graduate students living on campus and 4,000 graduate students on housing waitlists. Building to meet demand created the option for up to 5,300 graduate students to live on campus, reducing their commute time and offering rental rates that are more favorable than the local rental market.
Mesa Nueva rates were set below mortgage costs with the anticipation that the rest of the graduate housing portfolio would subsidize the development and meet the waitlist demand. This strategy did not support the additional development necessary to reduce the waitlist. HDH’s initial strategy was to gradually increase graduate rental rates over time to match expenses, but as this proposal was presented each year to the graduate housing advisory committee, there was opposition to increasing rents above inflation. The resulting structural deficit has required HDH to pivot to a new pricing strategy that meets two objectives: 1) Continue to offer graduate housing priced below similar units in the market by 20% (or more); and 2) Progressively eliminate HDH deficits over the next 10-years.
These are difficult decisions. The pricing strategy was based on five principles:
- Affordability: To provide campus-operated housing for students at rates that are at 20% below market value
- Predictability: To limit annual increases for students to 3% during their entire contract
- Access: To increase housing availability and try to reduce time on the waitlist
- Choice: To provide a range of options and price points reflecting the variety of needs and financial constraints of graduate students
- Sustainability: To make sure that HDH is financially sustainable
Our initial approach was to exempt current graduate students with existing contracts from the one-time rate adjustment. However, we heard significant concerns for graduate students who deferred admission due to the pandemic, as well as for graduate students who stayed remote for the year.
Taking into consideration the feedback we heard, HDH is introducing a new exemption. Current residents and all students admitted in Fall 2020, or earlier, will be exempt from the one-time rate adjustment for the duration of their eligibility. They will pay the current rate with a 3% annual increase. With the new exemption in place, no current student is impacted by the one-time rate adjustment. Moreover, the population covered by the exemptions will represent 90% of our fall 2021 residents.
While the rate for new students will increase by an average of 30% over previous contracts, UC San Diego’s campus housing prices remain below the UC average, despite having an inventory that is much larger and much newer.
To meet the needs expressed by some of our students, who are looking to share a room in larger units, we will offer a double room occupancy option at half price. We recognize that this is not an option for everyone, but we are committed to providing choices.
Finally, we note that, as described elsewhere, the university is investing additional resources in graduate support to make it more robust, predictable and equitable. The university is also adding $2 million to the second round of CARES funding for graduate students, to augment the various financial aid programs already in place.
Progress on complex problems like housing can only be achieved when we come together and engage in thoughtful discussion. We value the thorough feedback received from so many, and we will continue to consider innovative solutions in the future.
